Gop Presents Tax-cut Package

October 14, 1995|The New York Times

WASHINGTON - — Republican tax-writers in the Senate agreed Friday to a seven-year, $245 billion package of tax cuts that includes a $500-per-child tax credit for most families, significant reductions in capital gains taxes and a break for corporations.

Friday's presentation of the majority's tax plan was the first step down a tortuous road for the tax bill, which has drawn nearly universal opposition from Democrats and the White House and only grudging support from some Senate Republicans.

The tax package must be approved by the Finance Committee - a formality since the Republicans hold a majority - and then placed in a huge reconciliation bill that also includes the welfare and Medicare programs.

Senate Majority Leader Bob Dole of Kansas said he expected the tax package to go to committee by next week and the reconciliation bill to be voted on by Oct. 24.

It is likely, nonetheless, that a bill resembling the one presented Friday will ultimately make its way to President Clinton, and almost equally likely that he will veto it.

The highlight of the package is the $500-per-child credit for families, a provision that is also the centerpiece of the House's tax-cut bill.

The House approved a seven-year, $350 billion tax cut in April, but in negotiations with the Senate agreed to lower the target to $245 billion.

The House bill makes the $500-per-child credit available to taxpayers with adjusted gross income of up to $200,000 per family. The Senate set its caps for the credit at $75,000 a year in taxable income for a single parent and $110,000 for couples. The lower caps were meant to help rebut charges by Democrats that the Republicans' tax plans favored the well-to-do.

The Senate and the House are in closer step over capital gains taxes. Each plan would allow individuals to protect from income taxes 50 percent of any profit from selling securities, real estate or other assets. That would reduce the capital gains tax rate for those in the highest tax bracket to 19.8 percent, from 28 percent.

For corporations, the rate would go from 35 percent to 28 percent in the Senate plan and to 25 percent in the House version.

The Senate agreement came after two days of closed-door negotiations among the 11 Republican members of the tax-writing Finance Committee. Democrats, who hold nine seats on the committee, refused to participate, saying that whatever the likely outcome, they would oppose the package.